The European insurance sector has expressed its misgivings about the new proposal of the European Commission to bring in a common consolidated corporate tax base (CCCTB) in two stages, leaving consolidation for later.
In a position paper released to the press on Tuesday 21 February, Insurance Europe, which represents the sector, mainly flags up the changes the Commission has made to facilitate the adoption of the proposal by the member states, following the project's failure in 2011. The Commission proposed that the 'consolidation' aspect of the results of the groups covered by the CCCTB would be dealt with at a later stage and by means of a separate legislative proposal.
“It is only through consolidation that the expected advantages of the CCCTB in terms of reinforcing the European single market can truly be achieved, because consolidation recognises a company's cross-border activity within the EU”, Insurance Europe writes. These advantages, it goes on to explain, concern offsetting the losses of a company in one country against its results in another country, the possibility to address concerns related to transfer pricing and double taxation. “Without consolidation, there would be no benefits for taxpayers to justify the introduction of the new system”, the insurance sector concludes.
Insurance Europe also argues that the advantages of consolidation will not be possible unless accompanied by new rules on VAT on financial services.
The Commission has also proposed a compulsory CCCTB, whereas its 2011 proposal provided for an optional tax base. As it takes the view that the CCCTB would be a kind of panacea to fight tax optimisation, it felt that businesses undertaking such practices would not initially want to be subjected to the CCCTB, hence its decision to make it compulsory. Insurance Europe recommends returning to an optional approach.
“Such an approach would allow companies that have no intention of expanding beyond their national borders - and who therefore only work within one tax system - to not have to shift needlessly to a new system”, Insurance Europe argues. “This is important as several insurers, particularly life insurers, focus only on the domestic market. It should also be said that some businesses would face increased complexity and compliance costs if the CCCTB is applied to EU operations only, but not to non-EU operations”. (Original version in French by Élodie Lamer)